2. Developing a sustainable business plan
Chapter 12
Developing a sustainable business plan
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3. Objectives
To define a sustainable business plan and demonstrate its value
To explore the business planning pitfalls that plague many new ventures
To describe the benefits of a business plan
To set forth the viewpoints of those who read a business plan
To emphasise the importance of coordinating the business plan segments
To review key recommendations by venture capital experts regarding a business plan
To present a complete outline of an effective business plan
8. To present some helpful hints for writing an effective business plan
9. To highlight points to remember in the presentation of a business plan
To underline some of the contrarian viewpoints on the importance of a business plan.

4. But first ?
Q. What is a ‘business plan’? Q. And what could it be used for?

5. What is a business plan? A document in which you:
Make your business case
Describe your operations
Identify your management team
Project the future financial situation
A tool for determining the essential operations
A primary document for managing the venture and raising funds
The entrepreneur’s roadmap

6. What about sustainability
Consider ‘impact’, in terms of:
Greenhouse gases
Energy use
Product life-cycle
Industrial systems (including firms) are not separate from the biosphere

7. The sustainable business plan

8. Business plan pitfalls
Green theming
No realistic goals
Failure to anticipate roadblocks
No commitment or dedication
5. Lack of demonstrated experience
6. No market niche

9. Benefits of a business plan
For the entrepreneur
Analyses all aspects of the venture
Strategy for uncertainties
Critical and objective view
Scrutinises assumptions
Examines operating strategies and expected results
Measurable benchmarks
–A communication tool for sources of funding
A tool for guiding the venture
For the investor
Details of market potential and securing market share
Ability to service debt and provide adequate returns
Critical risks and crucial events
A comprehensive overview of the entire operation
A useful guide for assessing planning and managerial ability

10. Who reads the plan? ?
Q. Who might be interested in reading your plan? (Identify all of the potential audiences)

11. Who reads the plan? Venture capitalists Bankers Investors
Potential large customers
Lawyers
Consultants
Suppliers

12. Who reads the plan? Bankers Stress financial aspects of the proposal
Equity investors and venture capital fund managers Emphasise market and finance issues
Business angels Look at the entrepreneur and ‘investor fit’

13. Three viewpoints The entrepreneur’s viewpoint
The potential customers’ viewpoint
The investors’ viewpoint

14. The five minute reading
The venture capitalists’ approach:
What are the characteristics of the venture and its industry?
What is the financial structure of the plan?
What does the balance sheet say about liquidity, net worth and debt/equity?
What is the quality of the entrepreneur(s)?
5. What is the unique feature of this venture?
6. Then, they skim read the entire plan

15. Putting the package together
Appearance – middle ground (plastic spiral bound, mostly single colour)
Length – no more than 50 pages
Cover and title page – company name, address and issue date
The executive summary – two to three pages
Table of contents

16. Ten guidelines Keep the plan respectably short
Organise and package the plan appropriately
Orient the plan towards the future
Avoid exaggeration
Highlight critical risks
Give evidence of an effective entrepreneurial team
Do not over-diversify
8. Identify the target market
9. Write in the third person
10. Capture the reader’s interest
… and be able to confidently answer the ten questions under the heading ‘Questions to be answered’

17. Business plan outline ?
Q. What content might you expect to see included in a business plan?

18. Business plan outline

19. Business plan outline (cont.)

20. Business plan outline (cont.)
Adapted from: Donald F. Kuratko and Robert C. McDonald, The Entrepreneurial Planning Guide,
Bloomington: Kelley School of Business, Indiana University, 2007

21. Business plan elements (1)
Executive summary
Write this after the rest of the business plan
A clever snapshot of the complete plan
Business description
Industry background, status and future trends
Thoroughly describe the venture
Sustainability
Define sustainability relevant to the business

22. Business plan elements (2)
Marketing
(As per Chapter 10)
Operations
Location, labour availability, wage rate, proximity to suppliers, customers and community support, taxes and zoning, plant and equipment
Sustainable development measures of performance
Describe how sustainability can be demonstrated (including triple bottom line indicators)

23. Business plan elements (3)
Management
Key personnel, advisers, consultants, or members of the board; structure of payment and ownership
Financial
(As per Chapter 11)
Viability of the undertaking, pro forma balance sheet, income statement and cash–flow statement
Critical risks
Unfavourable trends and difficulties

24. Business plan elements (4)
Harvest strategy
Management succession and investor exit strategies
Milestone schedule
Provide a timetable for the various activities
Appendix and/or bibliography
Additional documentation

25. A practical example
Refer to Appendix 1 for an example business plan – ‘Red River Optical: Affordable reading glasses for Vietnam’

26. The pitch ?
Q. Now it is written. How can you (verbally) present your plan to an audience?

27. The pitch
Presenting the plan to stakeholders – especially funding providers
This is also known as ‘the elevator pitch’
Be organised, well-prepared, interesting and flexible

28. The pitch Focus on the plan Demonstrate a reachable market
Explain the business model
Tout the management team
Explain the metrics
Motivate the audience
Answer: ‘Why you?’ and ‘why now?’

29. Key concepts ?
(close your books) Q. Who will read your business plan? Q. What are the main sections in a business plan?

30. Key concepts Business plan audiences The business plan outline:
Venture capitalists, bankers, investors, potential large customers, lawyers, consultants and suppliers
The business plan outline:
Executive summary
Business description
Sustainability
IV. Marketing
V. Operations
VI. Sustainable development measures of performance
Management
Financial
Critical risks
Harvest strategy
Milestone schedule
Appendix and/or bibliography